Oct 20, 2026 · 47 min · 10 segments
**Ryan Denehy** was running Electric, an outsourced IT department for thousands of companies, when he decided to tear it up. The company had grown triple digits five years in a row and raised $200…
Ryan DenehyGuest
Brennan PothetesHost
Do you think a lot of pre 2024 ish companies should just completely refactor like that?
I mean, it depends, right? Like we were very much a tech enabled managed service that had the opportunity to become a native AI company with a lot of the advantages that came along with that.
So even though it was hard, it made a ton of sense and we had an unfair advantage with all of the data, with the go-to-market motion, with all those things.
What you and I both know is that there are, I think it last counts 1,700 unicorns or rather 1,700 companies that at one point in time, someone decided was worth a billion dollars on paper.
And most of the ones from kind of the COVID era, like us, There are a ton that were actually totally fine B2B SaaS companies.
And then like, for those of us not in the venture space, there's a bunch of people essentially like pitching your original business and being like, oh, now we can like inject AI and make it blah, blah, blah, blah, blah.
Like, where do you think they're wrong? And where do you think they're right? And like, what's changed since, you know, you first started? Yeah, I think plenty of
But I'm very skeptical that the fundamentally different economics that many of them are underwriting to will actually materialize.
And so it's very easy as a venture investor to look at something like an IT services business in a vacuum and say, okay, all things being equal, we inject AI and get rid of all of the repetitive labor.
drive a ton of margin expansion a lot of profitability and then we can sort of automate this go-to-market motion that assumes a that all of those things are happening while everything else in the business into the market remains true which it's not there's immense downward pricing pressure so what what i'm hearing from some of the other i.t services roll-ups is that most of the margin expansion that's coming from ai now is a coming from off-the-shelf tools that the 15 other pe-backed roll-ups all have access to and b while that's happening they're losing pricing power over their customers because customers are expecting so much more for less money when your alternative isn't just an i.t service provider it's a gazillion different chatbots that you can go use.
And it's just the customer expectations for how the value that the vendors are going to deliver so wildly different now than it was pre-AI.
Do you think a lot of pre 2024 ish companies should just completely refactor like that?
I mean, it depends, right? Like we were very much a tech enabled managed service that had the opportunity to become a native AI company with a lot of the advantages that came along with that.
So even though it was hard, it made a ton of sense and we had an unfair advantage with all of the data, with the go-to-market motion, with all those things.
What you and I both know is that there are, I think it last counts 1,700 unicorns or rather 1,700 companies that at one point in time, someone decided was worth a billion dollars on paper.
And most of the ones from kind of the COVID era, like us, There are a ton that were actually totally fine B2B SaaS companies.
And then like, for those of us not in the venture space, there's a bunch of people essentially like pitching your original business and being like, oh, now we can like inject AI and make it blah, blah, blah, blah, blah.
Like, where do you think they're wrong? And where do you think they're right? And like, what's changed since, you know, you first started? Yeah, I think plenty of
But I'm very skeptical that the fundamentally different economics that many of them are underwriting to will actually materialize.
And so it's very easy as a venture investor to look at something like an IT services business in a vacuum and say, okay, all things being equal, we inject AI and get rid of all of the repetitive labor.
drive a ton of margin expansion a lot of profitability and then we can sort of automate this go-to-market motion that assumes a that all of those things are happening while everything else in the business into the market remains true which it's not there's immense downward pricing pressure so what what i'm hearing from some of the other i.t services roll-ups is that most of the margin expansion that's coming from ai now is a coming from off-the-shelf tools that the 15 other pe-backed roll-ups all have access to and b while that's happening they're losing pricing power over their customers because customers are expecting so much more for less money when your alternative isn't just an i.t service provider it's a gazillion different chatbots that you can go use.
And it's just the customer expectations for how the value that the vendors are going to deliver so wildly different now than it was pre-AI.
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